I was the doctor on duty one night in August when the ambulance rushed a man into our Midwestern hospital ER. As I walked into the room, the scene was right out of TV. A nurse was trying to start an IV. Someone was running an EKG. A student had just put oxygen in the patient’s nose. The room seemed crowded. The paramedics were sweating and slightly out of breath.

But my attention was on a pale, thin, fifty-five-year-old man sitting bolt upright on a gurney, clutching his chest and straining to breathe. Cold sweat dripped off his nose. I asked a couple of quick questions as I leaned him forward to listen to his lungs. Someone handed me his EKG showing an acute heart attack.

I slipped out of the room for a second to get the cardiologist on the phone. He would be right in, along with the rest of his team. But it was a Thursday night, late, and they were coming in from home. It would be at least twenty minutes until high-tech medicine could work its wonders, until the cardiologist could thread a thin plastic catheter into the patient’s heart and put in a stent to open his blockage.

I was back to the room in a flash, and he looked no better. We gave him intravenous nitroglycerin, morphine, and powerful blood thinners. He began to look less frightened and some color crept back into his face. We still had a few minutes before they would be ready for him in the cardiac catheterization lab.

Just then I became aware of a woman quietly sobbing in a chair in the corner of the room, probably his wife. I walked over toward her and, as I neared, I reached out to touch her shoulder. She suddenly turned a fierce face up at me, saying: “When he told you he’d been having pain for two hours, he was lying! He’s been having chest pains for the last two weeks!”

She didn’t let up: “We were in the ER six months ago with his chest hurting, and they told him to see his cardiologist, but we don’t have any insurance. They won’t see him again without cash up front! What are we supposed to do?”

Her voice rising, she added: “And you know what else? They’re suing us in small claims court right now over the bill from our last ER visit!”

Here was this poor woman, in my ER, not only deathly afraid that she might lose her husband tonight, but also afraid that whether he lived or died they might face an impossibly huge medical bill and lose their house, their car, everything.

The patient was a self-employed house painter, and he’d had a previous heart problem. Self-employed and a pre-existing condition — in America today with those two strikes, you are out. There is no way to afford health insurance. Is the Affordable Care Act going to fix this?

The Affordable Care Act and the Health Care Lobby

The Affordable Care Act (ACA) faces an uncertain future. The 11th Circuit Court of Appeals in August ruled the individual mandate unconstitutional. Judge Hull, who cast the deciding vote, was a Clinton appointee. The verdict states:

This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives.

The ACA was essentially written in the Senate Finance Committee chaired by Max Baucus. The actual author was his chief health care aide, Liz Fowler. Her job before working for Baucus? Vice president of WellPoint/Anthem/Blue Cross, the country’s largest health insurer.

President Obama signs the Patient Protection and Affordable Care Act at the White House on March 23, 2010. Credit: Creative Commons/Keith Ellison.

The health insurance industry played both sides against the middle during the congressional debate. While publicly claiming to be in favor of reform, they secretly funneled millions to front groups and organizations like the Chamber of Commerce, which fought the bill tooth and nail. What the insurers wanted most out of the deal was the individual mandate — a federally enforced requirement that all Americans buy their defective products, with taxpayer-financed subsidies for those who couldn’t afford the premiums. What they wanted least were regulatory burdens that might limit their profitability.

Not being able to buy insurance if you are sick is one of the catch-22 aspects of our crazy system. In the eyes of insurance bureaucrats, it seems that life itself is a pre-existing condition. The ACA’s ban on the use of pre-existing conditions to deny insurance coverage is scheduled to go into effect in 2014. Preventing that will be the next target of their lobbying fury.

It’s Good to Be an Insurance Company

In this down economy, there are few bright spots for investors. Thank God for health insurance.

The Big Five health insurers — WellPoint, UnitedHealth, Aetna, Humana, and CIGNA — together cover almost 100 million of us. Their profits from April to June 2011 totaled over $3.3 billion, 13 percent over their second quarter profits in 2010. Last year was their best year ever. For the twelve months ending in July 2011, these giants saw their average stock price rise almost 50 percent. These are huge corporations: WellPoint and UnitedHealth are in the top fifty of the Fortune 500.

What to do with all that profit? WellPoint, the behemoth created a decade ago from formerly nonprofit Blue Cross plans in fourteen states, spent $67 million on lobbying over the past three years. They paid their CEO, Angela Braly, $13 million in 2010, but that was paltry compared to the reimbursement package of UnitedHealth CEO Stephen Hemsley, who cleared $37 million, including the stock options he exercised.

Health insurance companies are raking in ever-rising profits, even as patients with insurance are driven into debt. Credit: Creative Commons/Images_of_Money.

Those stock options take on extra significance when company stock repurchases are considered. WellPoint, to take only one example, spent $21.6 billion of patients’ premium dollars to buy back its own stock from 2003 through 2010.

Spending billions on stock buybacks benefits a tiny elite of CEOs, board members, and top officers, who are compensated largely with stock options. They buy the stock back to push the price upward. Their options increase in value as the share price rises. This is an enormous transfer of wealth from individuals and employers to top management. It benefits the largest Wall Street stockholders as well, but not you, not me, not patients.

This industry exists to collect premiums and process claims, and while they have no problems collecting our premiums, it’s a different story when they have to pay. The June 2011 AMA Health Insurer Report Card revealed commercial health insurers have an average claims-processing error rate of 19.3 percent, an increase of 2 percent compared to last year. The increase in overall inaccuracy represents an extra 3.6 million in erroneous claims payments compared to last year and added an estimated $1.5 billion in unnecessary administrative costs to the health system. Medicare, by comparison, had an error rate of less than 4 percent.

They are obviously not using their piles of cash to improve service. What about lowering premiums? In our dreams.

Health insurance premiums have more than doubled over the last ten years, rising at four times the overall rate of inflation. (Over the same period Medicare premiums have barely risen at all, with no increase in out-of-pocket expenses.) While premiums have risen, coverage has shrunk. Copays and deductibles increase every year. People with individual coverage can have annual deductibles of $10,000 and more. No wonder illness leads to bankruptcy, even if you have insurance.

Bankruptcy, Moral and Financial

Every business day in America, 3,700 families file for bankruptcy caused by illness and medical bills, and that number is rising. This shameful situation happens in no other wealthy democracy. It would be a scandal anywhere else. Most medically bankrupt families were middle-class before they suffered financial setbacks. Roughly 60 percent of them had attended college; twenty percent of families included a military veteran or active-duty soldier.

Most astoundingly, 60 percent of the individuals whose illness led to bankruptcy had private health insurance when they got sick. Don’t we buy health insurance to avoid financial ruin? High deductibles lead directly to bankruptcy and foreclosure. To make matters worse, they cause people to postpone needed care. All of which lead to higher insurance company profits.

The insurers don’t like to tell their customers this, but when they talk to their Wall Street masters, they sing a different tune. Angela Braly of WellPoint, speaking during a conference call for financial analysts in 2008, was asked if she would consider lowering premiums if that would increase enrollment in Anthem policies. Her reply, “We will not sacrifice profitability for membership,” was just what they wanted to hear.

That sentiment hasn’t changed. Recently Aetna’s chief financial officer, Joseph Zubretsky, made similar comments on a conference call. Concerned that investors might think Aetna was willing to grow by adding people to its rolls who could have substantial medical needs, Zubretsky soothed their fears, “We would like to have both profit and growth, but if you have to choose between one or the other, you take margin and profit and you sacrifice the growth.”

Recall that these are the same companies that developed algorithms to target women diagnosed with breast cancer so they could scour their health records for an excuse to cancel their policies. This inhuman practice, known as rescission, has supposedly been banned by the ACA.

Buying Doctors

If insurance companies are not lowering premiums to attract more customers or investing in infrastructure to reduce errors, what else besides their own stock (and some politicians) are they buying? Doctors! UnitedHealth is quietly buying medical groups who treat patients covered by its plans in several areas of the country. WellPoint announced in June that it would acquire CareMore, which operates twenty-six clinics in the Los Angeles area. CIGNA claims that it saves 9 percent on patients treated by doctors in a Phoenix medical group it controls. Is this a good thing?

Some observers watching the developments say the health law, which in part was sold as a way to rein in insurers, has had the opposite result, opening the door for the companies to take control of even more parts of the health system.

“There’s a gigantic Murphy’s law emerging here,” said Ian Morrison, a California-based health care consultant who does some work for United, as well as most of its competitors. “The very people who were the demons in all of this, that the public can’t stand — managed-care firms — are the big winners.”

And the losers? Patients, and those of us paying premiums.

Health, Health Care, and Health Insurance

No other wealthy democracy spends as much on health care as we do. It’s not even close. Most of our peer countries spend about half as much per capita as we do.

If you hear politicians proclaim “America has the best health care in the world,” you can stop listening to them at that point. They are not reality-based. We may be paying the most on the planet for health care, but there is no objective evidence to support the claim that our health care is the best. Again, it’s not even close. The World Health Organization ranks U.S. health care thirty-seventh, just below Costa Rica.

No other wealthy democracy relies on for-profit insurance companies. Here we stand alone.

On August 10, 2011, the Saint Louis Post-Dispatch editorialized, “IfAmerica truly is serious about dealing with its deficit problems, there’s a fairly simple solution. But you’re probably not going to like it: Enact a single-payer health care plan.” The editorial goes on to explain that the “way for government to address its health costs is not to shift them, but to reduce them. This is what a single-payer health care system would do, largely by taking the for-profit players (insurance companies for the most part) out of the loop.”

The editorial asserts, “the ACA didn’t go far enough,” and concludes: “Eventually, the United States will have a single-payer plan. But we’ll waste a lot of money and time getting there.” Its authors could have added “and waste a lot of lives” too.

What is a “single-payer plan” like the Post-Dispatch endorses? Robert Reich, author, professor, and secretary of labor under Bill Clinton, explained it this way in February 2011:

If the individual mandate to buy private health insurance gets struck down by the Supreme Court or killed off by Congress, I’d recommend President Obama immediately propose what he should have proposed in the beginning — universal health care based on Medicare for all.

Medicare is a single-payer plan. Everyone over age sixty-five is covered by this simple, single plan, which is publicly financed and privately delivered. How would a single-payer plan save money? The Post-Dispatch explains, “Streamlining payment through a single nonprofit payer would save more than $400 billion per year, enough to provide comprehensive, high-quality coverage for all Americans.”

The respected journal Health Affairs published more evidence of the economic advantage of a single payer system on August 19, 2011. The article “US Physician Practices Versus Canadians: Spending Nearly Four Times As Much Money Interacting With Payers” found that U.S. physicians’ office staff “spent 20.6 hours per physician per week interacting with health plans — nearly ten times that of their Ontario counterparts. If U.S. physicians had administrative costs similar to those of Ontario physicians, the total savings would be approximately $27.6 billion per year.”

The evidence is overwhelming: the for-profit insurance industry adds a huge amount of inefficiency, bureaucracy and cost to our system while adding no value, only hassle. These companies are parasitic middlemen we would be better off without. Their interest is in wealth care, not health care.

Hoping Congress will fix this leads only to despair. We need new ways to weaken the death grip this powerful industry has on us.

Divestment

There is a battle going on for the soul of America. Before he died, Ted Kennedy wrote to President Obama about health care reform, calling it “the great unfinished business of our society.” Kennedy avowed, “What we face is above all a moral issue; that at stake are not just the details of policy, but fundamental principles of social justice and the character of our country.”

Back in the ER on that hot August night, I sent my man to the cath lab and they successfully stented his blockage. He went home the next day with a bill for $25,000. I tried to call him a few months later, but the phone number was “no longer in service.”

Congress and the politicians are “no longer in service.” We’ve got to look elsewhere.

Could we simply boycott health insurance? No, over 50 million are without insurance now, and they are living sicker and dying younger because they have barriers to care.

Stockholders with a conscience have tried for years to engage corporate leadership and have attempted shareholder resolutions to reform the industry from the inside. Despite their best efforts, they have had no significant positive effect so far.

From 1985 to 1990, over two hundred U.S. companies cut all ties with South Africa, resulting in a loss of $1 billion in direct American investment. This economic pressure hastened the fall of apartheid. It happened as a result of people power, democracy in action. Pension funds divested from companies doing business with South Africa. Faith communities declared they would not support injustice. Students called on their universities to cleanse their endowments. An idea was born — “socially responsible investing.”

There is nothing socially responsible about investing in the health insurance industry.

"Go to your church, your union ... your friends and neighbors, and tell them it’s time to get the health insurers out!" the author writes. Here, a Unitarian Universalist congregation in Cortland, New York, rallies for single-payer health care. Credit: Creative Commons/citizenactionny.

Up to now, they have received little scrutiny from investors. One exception is Domini Social Investments, whose Global Investment Standards give “support [for] government’s responsibility to provide basic public goods that are as varied as health care, prisons, primary school education, and national security.” Domini is “concerned about the extent to which health insurance privatizes a public good.”As a result, Domini has disqualified most health insurers from their portfolios.

In contrast, the $4 billion TIAA-CREF Social Choice Equity Fund holds $24 million in WellPoint stock, as well as Aetna and Humana from the health insurance Big Five. WellPoint stock may only represent 0.6 percent of the total fund, but in this large, diversified mutual fund, which includes over 800 individual stocks, WellPoint is in the top 5 percent of the fund’s largest holdings. TIAA-CREF has refused to exclude health insurance companies.

The Presbyterian Church USA, often in the vanguard of the faith community, is there again. Their General Assembly meets in the summer of 2012 and they will vote on an “Overture” to “implement divestment procedures as well as encourage individual Presbyterians and congregations to divest of holdings in the [publicly traded health insurance] companies.” Other faith groups cannot be far behind.

We have nothing to lose. Health insurance companies have everything to lose as their stock prices drop and their influence wanes. Go to your church, your union, your pension plan, your 401k advisor, your university endowment, your city council, your friends and neighbors, and tell them it’s time to get the health insurers out!

Who can defend these corporations? There is no business case, no health care case, no moral case to support their ongoing existence. They make their profits by avoiding taking care of sick people — by refusing to issue policies, canceling policies, or denying payment. I went to medical school in order to care for the sick.

The health insurance industry must go.

Rob Stone is a gardener, grandfather, and teacher. He has practiced emergency medicine in Bloomington, Indiana, since the early 1980s, and for the past year has been transitioning his medical career to hospice and palliative medicine. He is founder and director of Hoosiers for a Commonsense Health Plan and serves on the board of directors of Physicians for a National Health Program.

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I’d support that, but I’d rather see them just do away with for-profit insurance. I don’t think they’re going to do anything anytime soon. That’s the beauty of divestment. We don’t have to wait for Congress.
Rob Stone MD

It is a horror what Medical Science has become. This horror strikes during a period in our history when people ARE sicker and need more care.

One day in Pharmacy someone handed me a letter. It was from an insurance company directing the Pharmacy to increase the pricing on all their meds. That insurance company was Blue Cross/Blue Shield. Indeed insurance companies are dragging hospitals and doctors around by the tail. Horror stories abound.

Here in Texas we did take that bull by the horns and it worked. We have State Health Insurance for anyone who needs it, and it’s completely free for those who can’t pay anything. (Then we got blamed when immigrants didn’t know we had the insurance, but that’s a different story.) Our State Health Insurance covers hospital, clinic visits and prescriptions — whatever it takes to achieve wellness. When people are healthy the entire State benefits.

Where we found hitches were on the Federal levels. It was downright crazy what was happening to those Patients. Moreover, the Feds made the Patients resort to lying and stealing services just to get the assistance they needed as critically ill Patients were falling through the Federal “donut hole”.

My view is that the Feds need to help provide funding, then they need to shut up and go away and let the States take care of their people. The only problem there would be places like Chicago or Kansas neither being known for quality healthcare. The problems are multifaceted as will be the cure.

Beth, I wish I could get behind your positive view of your home state, but the newly released census data shows Texas with 24.6% of its population uninsured, by far the highest percentage in the nation. That’s over 6 million Texans without any insurance coverage. Looks to me like pretty strong evidence that Texas State Health Insurance has not done the job. Sadly, Texas has failed miserably to take care of its people. It will take “The Feds” to fix this problem.

Outstanding article! One of my careers is policy. This article touched my personal and professional beliefs. The industry of profitable health care must end. It’s is a long reign of terrorism against the sick worse than war in number of casualties. But worse, as the article states, because it singles out the middle-class, those less able to defend themselves.

Hi Doug (are you the Bloomington DS?),
You raise several issues. Don’t forget hospitals in your formula that includes doctors and patients. Insurance companies have come between us, and the evidence is clear that it has had monstrous consequences. We are the only wealthy country in the world with for-profit health insurance, and the only country that would charge 6 grand to set a child’s arm. This is all because we have embarked on this unique-in-the-world experiment of “free market medicine.” 6 grand is “what the market will bear,” plain and simple.

Your point about the lawyers I actually disagree with. It’s a story too long to do justice to in this space, but malpractice is an over-rated bugaboo. Malpractice actually explains a relatively small part of the increased cost of health care in this country as opposed the rest of the “civilized” world.

A very disturbing and very well written article. Thank you. I really understand the call for divestment because engagement (as its been tried) hasn’t worked. But neither will divestment, esp by SRI/ethical investors. What one investor sells, another buys. Tobacco is a good example and here you have 10% of all institutional investors avoiding the stock.

So what can work? Muscular, intelligent engagement by the big institutional investors, including the state pension funds whose members are also the people who suffer as a result of how this sector operates.

And it’s got to be at the sector level – trying to find a “bad” health insurance company is emotionally appealing but wont work either since even if we change it, another will adopt its role.

There is some hope for thinking the kind of systemic approach I speak of can be made to work. When we started PharmaFutures http://pharmafutures.org/ “Big Pharma” were totally against affordable pricing for people in middle income/poorer countries. Their approach isnt perfect now but its much improved.

I’d also really recommend “Fixing The Game” by Roger Martin, dean of Rotman Business School. The dysfunctional logic of shareholder value maximisation can’t be successfully addressed symptom by symptom. It’s a diseased system for sure, but we need to understand how it really works to know where to make the most leveraged therapeutic interventions and make the system less abusive and more about sustainable wealth creation with “good enough” returns for its investors (ie you and me).

Health Care for All – Texas has posted a disturbing article from the Boston Globe (read the entire article at http://www.hcfat.org on the “third world” level of health care in Texas – despite having some of the best medical centers in the world. The stark and troubling statistics on disparities in health care in Texas are the “canary in the coal mine” if we continue in the direction we are headed (continuing to use private, for-profit health plans). It’s long past time for a single-payer national health program.

I ran across this article after finding this website through a link to a story on MLK’s theology. To be upfront, I come to this with the perspective of a radical libertarian/anarchist, but the obvious flaws in the current US health market have left you the chance to convince me that government health care is the answer, so I read this article.

You say there is no business case for health insurance companies. This is obviously not true, as they provide (ideally) the pooling of the resources of a large number of people to bargain for lower prices and to hedge against individual risk. Your single-payer system is the same thing, albeit with a monopoly non-profit insurance company. Or, in the case of Medicare, a negative-tens-of-trillions-of-dollars-profit.

The main problems of increasing premiums and rates of rescission, I believe, can be traced to the failure to protect the contract rights of individuals. If insurance companies are fighting to deny legitimate claims, the proper response it to fight back. The proper response to increasing premiums is to change providers, while forcing your original provider to continue to cover any on-going treatments for any condition you developed while in their plan. This requires a robust claims court system, who’s mere existence will help immensely in scaring corporations out of their immoral practices.

The complete lack of transparent pricing reveals the (pun) sickness of the health care market. How can you effectively shop around for cheaper services if you have to go out of your way to ask about them? Generally your insurance company tells you where to go, and they negotiate with the doctor. This provides a semblance of a pricing mechanism, but not a very effective one for the consumer. My remedy would be for most people to have cheap, high deductible ($3k?) emergency plans. This would get people to shop around for medical services and drive prices down. How much, in cash, will you charge me to set my broken arm? 200 bucks plus expenses? Better than $6k through a middleman. Having prices at the check-out counter is the sign of a healthy market.

This is getting long, so I’ll make one last point. The faith with which you seem to place in a government-run health care system seems naive to me. Many horrible laws (bailouts, Patriot Act, etc.) are carried out against the will of the people. How would your government-run health care system not fall prey to craven politicians? Are these men who lie for a living victims of corporate donations to their campaigns? Are those who seek absolute power merely angels corrupted by the machinations of K Street? I think not. In addition, the high re-election rate provides no incentive for politicians to both control costs and provide high-quality service. The only mechanism is what we are seeing in the social welfare states of Europe, which is foreign-imposed austerity. The only check on a politician is not loaning him any more money. This is the fate of Medicare, Medicaid, Social Security, etc. Doubling income taxes would not be enough to overcome the deficits.

In conclusion, your idea of divestment is a noble one and I encourage it against all companies with which you have a moral qualm. However, it will not work, especially with the government forcing us to buy their products now. You know it and I know it. Your best bet would ironically be to join conservatives and advocate for the overturning of the individual mandate

Anyway, sorry for being months late to the party. I admire your compassion and zeal, even if I find your efforts counterproductive. Hopefully through reason, we can discover the most effective means to achieve our shared end of affordable healthcare for all.